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NPRR206

Summary

Title: Nodal Market Day-Ahead Market Credit Requirements
Next Group:
Next Step:
Status: Approved on 02/16/2010
Effective Dates:
12/01/2010

or per the Nodal Protocol Transition Plan http://www.ercot.com/mktrules/protocols (03/01/10 Nodal Protocols Library)

Action

Date Gov Body Action Taken Next Steps
02/16/2010 BOARD Approved
02/04/2010 TAC Recommended for Approval ERCOT Board for consideration
01/26/2010 PRS Recommended for Approval TAC for consideration.

Voting Record

Date Gov Body Motion Result
02/16/2010 BOARD To approve NPRR206 as amended by the 2/12/10 ERCOT comments and as revised by the ERCOT Board with the requirement that TAC bring back definitions for the variables to the April 2010 ERCOT Board meeting. Passed
02/04/2010 TAC To recommend approval of NPRR206 as amended by the 2/1/10 Luminant comments and as revised by TAC with direction to the MCWG to provide a proposal to TAC for a conservative Nodal Market start paradigm for the first 60 days of DAM operation and to further define the "e" variables. Passed
01/26/2010 PRS To recommend approval of NPRR206 as amended by the 1/26/10 Reliant Energy Services comments and as revised by PRS and to forward NPRR206 to TAC. Passed

Vote tallies here reflect individual votes, not the weight of the votes by market segment. Affirmative votes are not recorded in these vote tallies. For additional details on the voting record, please consult the Recommendation or Action Report, or the official vote tally if available, as posted in the key documents.

Background

Status: Approved
Date Posted: Jan 20, 2010
Sponsor: Randa Stephenson on behalf of Luminant
Urgent: No
Sections: 4.4.10
Description: This Nodal Protocol Revision Request (NPRR) revises the nodal collateral requirements by Qualified Scheduling Entities (QSEs) who participate in the Day-Ahead Market (DAM). The change will potentially reduce the collateral burden for QSE’s bids while sufficiently collateralizing ERCOT. The revisions are based on discussions held at the Market Credit Working Group (MCWG). The proposed NPRR language has been developed for implementation by the Texas Nodal Market Implementation Date (December 2010). Additional changes to further improve nodal collateralization may be proposed in the future, some of which may require nodal system changes. Revisions requiring significant nodal system changes following this NPRR are not expected to be implemented by the December 2010 Texas Nodal Market Implementation Date.
Reason: The current collateral requirements for QSEs to participate in the DAM are significant and based on potential offers and bids and not what is actually cleared through the market. Thus, Market Participants have an increased cost of credit. Some are concerned that the significant collateral requirements on QSEs will discourage Market Participants from participating in the DAM, which will create inefficiencies and additional energy price volatility. Additionally, unhedged QSE Load in the DAM may result in extreme default risk in Real-Time. The changes in this NPRR address the over collateralization of QSEs and better reflect the risk and costs of DAM participation. This NPRR contains several "variables" (c, d, a, b, t, u, y, and z highlighted below) that serve as placeholders for values that will ultimately be determined by the Wholesale Market Subcommittee (WMS) prior to the Texas Nodal Market Implementation Date in December 2010.

Key Documents

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